Market Darling Greggs Gets First Sell in a Year on Pork Prices
Market Darling Greggs Gets First Sell in a Year on Pork Prices
(Bloomberg) -- Greggs Plc, which has seen its share-price soar 93% this year, was just handed its first sell rating in almost 12 months.
The U.K. company, which has seen a boost to sales from the introduction of a vegan sausage roll, may be hit by rising pork prices amid China’s African swine flu outbreak, Peel Hunt analysts Jonathan Pritchard and John Stevenson wrote in a note. The recommendation was cut to reduce from hold, making Peel Hunt the only broker among 9 tracked by Bloomberg to have a sell or equivalent rating.
“The valuation is implying that the fun will never end,” Pritchard and Stevenson wrote. “Investors should take profits here.”
The analysts still expect first-half results due on July 30 to impress, driven by the vegan sausage roll product, a wider breakfast range and shorter queues. But tougher comparatives will make it increasingly difficult to positively surprise the market, they said.
Greggs’s shares slipped as much as 2.3% following the downgrade, versus a 0.6% decline for the FTSE All-Share index. The baker is the benchmark’s third-best performer this year and, according to Peel Hunt, the highest-valued U.K. bricks and mortar retailer “by a mile.”
Peel Hunt’s so-called ‘reduce’ rating means the broker is projecting a 5% to 15% share price decline over the next 12 months. It’s one notch above above what it calls a ‘sell,’ which suggests downside of more than 15%.
Among the other eight analysts surveyed by Bloomberg, six rate the shares hold and two have buy recommendations.
To contact the reporter on this story: Joe Easton in London at jeaston7@bloomberg.net
To contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, Monica Houston-Waesch
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